50% of consumers use in store pickup to avoid shipping costs Forrester’s Technographics® data  shows that the use of "buy online, pick up in-store" has grown over the past few years. About 43% of US online adults currently use this feature, up from 33% in 2010. In-store pickup is a great way for retailers to create upsell opportunities, as a third of consumers who go to the store to collect their goods state that they buy additional products when in-store.
NY Times Dec 2011 “Nordstrom Links Online Inventory to Real World: “One leading dept store retailer enabled online off from stores when items were out of stock and saw a 20% increase in same stores sales for the 11 months post-launch compared to the 11 months prior to launch. Deloitte Analysis: This directly contributed to a $200 M in average inventorySTATS: Cross-Channel Brand Interaction: 2010 Consumer Preferences (Demandware and Sterling Commerce).
Thank you Bill! The purpose of this map is just to give everyone a sense of the breadth and scale of what is going on out there in RFID in retail. Omnichannel is a key motivator, particularly in the North American market where pressure from pure-play ecommerce is highest, but its not limited to that by any means. A few big programs get all the press…but for each of those, there are several lesser known programs doing innovative and exciting things with our technology. At Impinj.com, we have a growing library of case studies that may inspire you.
Bill McBeath, is an analyist from ChainLink Research. I think he has some really interesting things to say about how retailers are regarding RFID technology as an essential foundational for many key initiatives….And, obviously, we get to see the numbers ourselves. Impinj alone has shipped over 5 Billion tag chips, and most of those in just the past couple of years. According to Mike Liard, analyst at VDC Research, apparel retail is where most of these RFID tags are going. I should clarify here…when I say “RFID”, I mean tags that are compatible with the global UHF Gen2 standard. These tags offer low cost and long-range readability, which is why they are popular for inventory visibility in stores, and for that matter, anywhwere in the retail supply chain.
Omni-channel is an important part of the RFID story, but there is much more to it than that. Its about many of the things that retailers do, and must do, to deliver a great shopping experience. It all starts with making a compelling offer to the customer, which is about your brand and perceptions of value, and I don’t have much to say about that!. But after that…after you’ve gotten people to come to the store, its about operational excellence, which can mean the difference between profit and loss even for the best brands. This dependence on excellence extends to omnichannel as well. In the case of omni-channel, as Bill pointed out, you might be able to deliver a great experience, but if you can’t do it efficiently you might be able to protect your brand okay, but at what cost and can you sustain it?The map on the pervious page has examples of retailers adopting RFID for all of the reasons shown on this chart. However, there is a definitely pattern in which retailers focus initially on store and shelf availability. That alone has significant pay back. This better inventory data is then rolled into an omnichannel program , which ultimately enables inventory optimization across the supply chain including stores, distribution centers, and fulfillment centers. Finally, and many retailers actually start here, RFID enables a range of improvements that make shopping more convenient, informed, personal, and exciting. We show this as a progression but the story and the starting points are not the same for everyone.
Macy’s is a great example of this pattern. Its not hard to decipher what’s behind their investment in RFID. The day-to-day work is focused on inventory management and store availability, but the leadership is clear in their message that it is about omnichannel. The exciting part of the story for me is that folks like Macy’s have a real advantage over the pure play ecommerce retailers. Macy’s has stores in key markets with carefully curated and managed inventory that can readily support same-day fulfillment. That arrangement will be very hard for a general purpose ecommerce player to replicate. But, Macy’s has to bring all of their assets to the table to make it work. The same is true for many other great retailers.I’ll take a few moments now to explain what RFID technology looks like in a store, then I will talk about some of the steps you can take to understand how RFID would transform you business and drive profits.
The most popular deployment model for RFID in retail today is to use hand held reader devices for very fast inventory taking or cycle counting. The one shown here is an RFID reader from TSL that can be coupled to a smartphone to support a variety of workflows...including taking inventory, finding particular items, processing returns, and so on. Its one of those things that you have to try to believe! Motorola is another major supplier of hand held systems that have been proven in retail applications. As you can imagine, the advantage of RFID in this case is that you can cycle count very fast and do it more frequently; solving a large number of inventory management and store availability problems. The first US retailer to go chain wide with this kind of solution, which was several years ago, was American Apparel. And they have reported significant benefits in terms of both loss prevention from better visibility as well as better front-store assortments. Yet, just this week, there was an announcement by American Apparel about their move away from hand held readers toward a fixed reader infrastructure. This brings us to the second deployment model: fixed reader and antenna systems.
On the left is a picture of an RFID antenna that was installed in an American Apparel store by their solution provider, Senitron. The Speedway Revolution reader and antenna hubs (shown at right) are hidden, but just one Speedway Revolution reader can drive up to 32 antennas, so it does not take that much equipment to cover the store. Of course there is a cost for this kind of infrastructure, but there are also huge advantages. One is day-in and day-out scalability and repeatability that you get when you don’t have to rely on associate compliance and variability, not to mention the higher and better use of associates time to help customers. And the other is the full time visibility that can’t be rivaled by handheld cycle counting. In just one interesting anecdote…after turning on this system…American Apparel was able to locate 1500 items in a store that had been considered lost! In my opinion American Apparel is a great example of a very compelling brand in which store execution has come from being a liability to a real advantage and RFID is at the core of that transformation. Now, with hands-free capability, they are moving rapidly along the path to perfecting the shopping experience. I encourage you to read and learn more about their story and to watch them in the years to come.The reader plus antenna approach highlighted here also works very well for creating reactive displays like the one that InMotion has deployed for LL Bean, shown on the previous slide.
The other approach to hands-free solutions is the new Impinj xArray. It was designed for easy integration into a drop ceiling as shown in this picture, in this case its difficult to tell them apart from the air vent in the middle.More importantly xArray is designed to read hundreds or thousands of tags in retail settings with ceilings from 10’ to 15’ high for continuous monitoring of the sales floor, or key transit points such as back to front or store exit. The xArray unit contains a Speedway Revolution reader like in the American Apparel example on the pervious slide, but now it is integrated into the same enclosure with a special electronic beam steered antenna. xArray has the unique ability to cover a large area as well as discern tag locations and movements. And, the amazing thing to me is that this whole thing can run off of the power provided over an ethernet cable using standard power over ethernet equipment. No A/C power, just an ethernet cable.This product is not yet available for general market but please get in touch with us if you are interested in learning more about it.
As promised, I want to talk now about the business case for RFID in retail. This chart shows the range of benefits that have been reported in the in the industry just for basic inventory management, not considering omni-channel and shopping experience benefits. One of the challenges that we’ve helped retailers with is how to estimate the likely impact of RFID on a their specific business. All retailers are different so applying the results of one to another is difficult even for retailers in a similar market segment. A lot of times, they way otherwise similar retailers run their business might differ in subtle but in meaningful ways. To help with this, we have developed a highly customizable simulator. The idea is to come as close as possible to estimating store performance under various conditions, includingwith and without RFID. Before I talk more about the simulator, I’ll walk through a simple thought experiment to illustrate what is at the core of the business case for inventory management. It also helps explain what is going on in the simulator.
The purpose of this thought experiment is to understand the contribution that store and supply chain operational excellence makes to the bottom line. In this first scenario we assume that we have perfect execution of the plan set by the merchandising team and so the initial on shelf assortment is perfect. Then, we run a sequence of shoppers through the store who require different sizes. At first, all is well, but after a while we start to see out of stocks, and in the end, we have some remaining items that need to be marked down. We can’t say if this is good or bad but we can say that the result in this case is due entirely to planning.In the second scenario we have a minor lapse in execution…we are missing the extra large but have one too many extra smalls! If we run the exact same sequence of shoppers through the store, we get a different result. There is an extra out of stock and another markdown. We can now say that this difference is entirely due to execution. Anyone who has looked at retail finance knows that this is where the money is made. Those incremental in-season or full price sales send all of the gross margin right to the bottom line. This is essentially what we are doing in the simulator but with much more detail and taking many more factors into consideration.
Estimating how better visibility leads to better availability, and in turn to more better staff utilization, more sales and fewer markdowns is a statistical and probability problem that lends itself very well to simulation. I wish I had time in this webinar to show you some examples of the simulator in action. Instead, I invite you to go to sps.impinj.com to learn more about it and give it a try. Or…get in touch with me personally. Some retailers find it to be an excellent tool for understanding the positive ripple effects of better visibility and security, others dig in deeper with us to help guide business decisions about how and were to deploy RFID. Don’t hesitate
Impinj is the leading provider of RFID technology for retail. Our success in this effort stems from the fact that we work closely with retailers and brand owners to ensure that our products support real applications. This has lead to the development of the Impinj GrandPrix platform that, simply put, gives our network of solution providers a head start. The GrandPrix platform includes the chips we make for the tags (called Monza) the chips we make for readers (called Indy) which you’ll find in the hand held devices we’ve mentioned already, and the reader systems themselves (including Speedway Revolution with antenna hubs, xPortal, and xArray). We also have invested in STP, the Source Tagging Platform specifically to enable retail suppliers to easily incorporate RFID tagging into their business process. If you are concerned at all about how apply and encode tags efficiently, please get in touch! GrandPrix is backed by one the industry’s largest IP portfolios dedicated to UHF RFID.
In closing, I like what Michael Burgess of Saks has to say about Omnichannel. Its more than just a fulfillment model. Its really about making sure you hang on to your customer no matter where they are. That means extracting as much value as possible from every interaction you have with them. Amazon doesn’t forget when I click on a product, yet, if I go to a store and literally pick that same item, the retailer doesn’t know it… so they can’t use it to give me a seamless experience. RFID can help bridge that gap as part of a long term omnichannel solution.
Optimizing Omnichannel Results with RFID
May 2012August 2013
Optimizing Omnichannel Results
Bill Toney, VendorNet, Inc.
Larry Arnstein, Impinj, Inc.
Senior Vice President,
Optimizing Omnichannel Results with RFID
• Omnichannel optimization via RFID
• RFID in retail today
• RFID deployment options
• Store Performance Simulator
• Why is RFID Being Adopted in Retail?
– Buying cycles are moving to real-time with mobile
– Industry modeling has proven a 3% - 5% monthly inventory
distortion at the SKU level with retail apparel
– Impacts in-store sales & customer satisfaction
– The ROI is broad once PI is fixed
• Stores, E-Com, Supply Chain & Loss Prevention
• What are the Technology Advantages?
– You can count 40,000 units/hour vs. 250 units/hour with
– Serialized GTIN generates exact SKU depth
RFID Omnichannel Optimization Curve
1 2 3 4 5 6 7 8 9 10 11 12
Demand versus Assortment
Retail Assortment Across Channels
Research online; buy instore
Research online; view in-store, buy online
View in-store; buy online
Source: CSCMP Supply Chain Quarterly 6/12Source: Accenture 3/13
59% would still purchase
companion items if out-of-stock
43% shop competitors when 1
item is out-of-stock*
*Source: Cross-Channel Brand Interaction: 2012 Consumer
Preferences; Demandware and Sterling
Eliminate Stock Outs with Ship-From Store
Key Omnichannel Opportunities with RFID
• Reduced Safety Stock Levels
– Increased revenue with more ATP inventory
– Optimize working capital
• Improved Fill Rates on Initial Pick Process
– In-store labor optimization with improved PI accuracy
– Customer satisfaction increase with items with low SKU depth
• Enable Broader Same Day Delivery Models
• Revenue increases with delivery model
• Strategic enabler with emerging faster delivery competitive
• Customer satisfaction impacts
43% online shoppers
use in-store pickup*
37% purchase additional
33% of consumers would
drive more than 25 miles to
Immediate Availability and No Shipping
With In-Store Pickup
*Source: Forrester Research
Considerations for Executing In-Store Pickup
• In-store Inventory Accuracy is Critical
• Real-time update
• Item and Store Participation and Rewards for Field Management
• Merchandise selection
• Store qualification
• Thoughtful Pickup Location
• Customer ease
• Training and Store Operations
• Established protocols and training
• Incentive plans
Key Omnichannel Opportunities with RFID
• Broader ATP Inventory Assortment with ISPU
• Increase revenue by improving ATP inventory levels
- Potential large impact here depending on SKU depth
• Largest impact is “Shallow” SKUs per store
• Improved Fill Rates and Faster Picks
• In-store labor optimization with improved PI accuracy
• Enables emerging location services model for both
• Customer satisfaction with ISPU
2+% incremental enterprise sales
are captured sales from Associate
Ordering Systems (AOS)**
40-70% of consumers leave
stores without buying everything
they came for
70% of those “lost sale”
consumers shop a competitor to
**Source: Cross-Channel Brand Interaction: 2012 Consumer
Preferences; Demandware and Sterling
Stock Outs Happen In-Store Too
Considerations For Executing AOS
• Realign Measurement and Rewards for Field
• Store Managers
• Refocus and Train Store Associates
• Up-front training
• Daily huddles
• Technology is Straightforward
• Fixed stations
Retail is going through huge
Retailers taking bold steps, catalyzed
by the need to provide full omni-
channel integration, a differentiated
customer experience, and improved
RFID is a core foundation.
-- Bill McBeath, ChainLink Research
Global Passive UHF EPC RFIDTag Units
Source: VDC Research
Products People Want
RFID in Retail
“We've spent the last 153 years
building warehouses, we just called
“We're extremely excited about the accuracy
that this [RFID] is going to bring to our
business, because having the exact volume -
exact quantity of product in the stores when
we think we have it - will be a huge sales
Chief Omnichannel Officer
Chief Stores Officer
2. Read them in the store
1. Apply & encode tags
at the source
Most Popular Deployment Model
• Easy to deploy
• Frequent cycle counting
• First full chain deployment hand
• Moving to hands-free solution
• Full-time inventory visibility
– Back to front visibility
– Large tag populations
• Continuous Monitoring
– Cumulative inventory
• Perimeter Visibility and Security
– Small tag populations
• Tag Locationing
August 2013 How can you estimate the value of improved execution?
Operations v. Planning
A Thought Experiment
XS S M L XL
Impinj Store Performance Simulator
Try it for free at http://sps.impinj.com
Impinj & our partner network deploy RFID solutions
for retailers & brand owners globally
RFID Readers ChipsRFID Tag Chips RFID Readers & Antennas
Platform for Gen2 RFID Solutions
>180 Patents Issued & PendingApplication Interfaces
What is Omnichannel Really?
“Omnichannel is most importantly
about creating a
compelling, integrated customer
experience that spans all the
customer’s interactions with Saks –
regardless of it being in-
store, online or in any other way. ”
Saks Direct President,
Questions & Answers